A secured loan is a type of finance backed by an asset, usually property, which helps reduce lender risk. This often allows borrowers to access larger loan amounts or benefit from lower interest rates compared to unsecured loans. While interest rates are generally lower, secured loans may come with arrangement fees, valuation costs for the asset, and early repayment charges if the loan is settled before the agreed term.
To qualify for a secured business loan, lenders usually require your business to have a trading history (often 6 – 12+ months), consistent revenue, and a valuable asset to offer as collateral, such as property, vehicles, or equipment. These loans are ideal for businesses looking to borrow larger amounts with more favourable terms.
Secured business loans typically range from £25,000 to £2 million or more, depending on the value of your asset and your business's financial health. Because the loan is backed by collateral, lenders are often more flexible with higher amounts.
While secured loans can take slightly longer than unsecured ones due to asset valuation, many lenders still offer fast approval, often within 48 to 72 hours. Funding can follow shortly after, especially if you have the required documents and collateral ready.
You can use a secured loan for almost any business purpose, from expanding premises to purchasing major equipment, refinancing existing debt, or boosting working capital. The security you offer opens up access to bigger borrowing for strategic investments.
Secured business loans generally offer lower interest rates than unsecured options, often starting around 3% APR and going up depending on the risk, asset, and lender. Repayment terms can range from 1 to 10 years, with fixed or variable rate options available.
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With a secured loan, a variety of business or personal assets can be used as collateral. Common examples include property, commercial real estate, machinery, vehicles, and inventory, though specific acceptance depends on the lender’s criteria.
Most lenders prefer property-backed loans, as real estate offers a clear market value and reduces risk.
However, other valuable assets, such as high-value equipment or stock, can also be considered. Using assets as security enables businesses to access larger loan amounts and often benefit from lower interest rates compared to unsecured borrowing.
The loan amount available through a secured loan depends primarily on the value of the collateral and your overall financial profile, including income, credit history, and business performance.
Amounts can range from tens of thousands to several million pounds, making secured lending a suitable option for both small businesses seeking growth capital and larger companies requiring substantial funding.
By offering collateral, borrowers can often access more competitive interest rates and longer repayment terms, making secured loans a flexible option for business expansion, property acquisition, or high-value equipment purchases.
If a borrower is unable to repay a secured loan, the lender has the right to repossess the pledged asset to recover the outstanding amount. This is why it is important to carefully consider which asset to use as collateral.
For property-backed loans, businesses often choose to secure the loan against a property they do not live in or a commercial asset, to minimise personal risk.
Planning a realistic repayment strategy and maintaining open communication with your lender can help prevent default and protect your assets while ensuring your business financing remains sustainable.
Yes, start-ups and early-stage businesses can apply for secured loans if they have eligible assets and can demonstrate a solid repayment plan.
Lenders focus on the value of the collateral rather than the length of trading history, which makes secured loans particularly useful for new businesses looking to fund expansion, purchase equipment, or improve cash flow.
By using asset-backed lending, start-ups may also benefit from higher borrowing limits and lower interest rates compared with unsecured financing, providing a more manageable path to growth.
The processing time for a secured loan typically ranges from 1 to 4 weeks, depending on the type of asset, lender requirements, and valuation process.
Property-backed loans may require professional appraisals and additional legal checks, while loans secured against machinery or vehicles can often be approved more quickly.
Once approved, funds are released in line with the loan agreement, allowing businesses to use the capital for growth, investment, or operational purposes.
Planning ahead and providing all necessary documentation can help speed up the approval process and ensure timely access to funding.
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"Secured loans unlock larger amounts of funding by using a property (and in some cases other) assets as collateral. This reduces risk for lenders and allows borrowers to benefit from lower interest rates, making it a cost-effective way to finance growth or other substantial investments."
